The Reserve Bank of Australia published a transcript of Deputy Governor Andrew Hauser’s fireside chat at New York University’s Money Marketeers, in which he explained why the RBA pivoted from cautious rate cuts in 2025 to policy tightening and how it is assessing an oil price shock linked to Iran. Hauser framed the shift as a response to inflation re-accelerating in an economy where demand has strengthened faster than supply capacity. He said three developments in the second half of 2025 changed the outlook: stronger global and Asian growth tied to the physical investment cycle around AI and data centres; broader financial conditions that were easier than the short-term rate alone implied, with well-capitalised banks and historically low credit spreads supporting credit growth; and a faster-than-expected closure of the output gap, with the RBA estimating supply capacity can currently grow at around 2%. Core inflation is now around 3.5% and headline inflation nearer 4%, prompting tightening, with the cash rate referenced at 4.35%. On the oil shock, Hauser highlighted Australia’s net energy-exporter status alongside near-total reliance on imported oil, low stocks of around 30 days and very high diesel use per capita, creating a real income shock even if national income and fiscal revenues benefit. He also noted the policy challenge of balancing short-term inflation pressure against potential activity weakness, the lags from the February and March rate rises, and the importance of preventing a temporary inflation spike from lifting longer-term inflation expectations. Hauser said the RBA was running a new forecast round that would be published in a few weeks as it works through the combined effects of higher oil prices and tighter financial conditions.
Reserve Bank of Australia 2026-04-14
Reserve Bank of Australia’s Hauser sets out case for renewed tightening as inflation rises and oil shock risks build
The Reserve Bank of Australia published a transcript of Deputy Governor Andrew Hauser’s remarks explaining the pivot from anticipated 2025 rate cuts to policy tightening in response to re-accelerating inflation, stronger demand, and a faster-than-expected closure of the output gap. He cited stronger global and Asian growth linked to artificial intelligence investment, easier financial conditions, and supply capacity growth of around 2%, with core inflation at about 3.5%, headline inflation near 4%, and the cash rate at 4.35%. Hauser also outlined policy trade-offs from an Iran-related oil price shock for an economy that is a net energy exporter but heavily reliant on imported oil, and said the RBA is preparing new forecasts to assess the combined impact of higher oil prices and tighter financial conditions.